Trump administration squares off with drugmakers over plan

Here's why drug prices are so high

Here's why drug prices are so high

Trump has decried "global freeloading" as a reason why the U.S. pays high drug prices, but the administration's plans to bring down costs actually piggybacks on what other countries have done to lower prices themselves.

Amgen, Regeneron, Roche and Bristol-Myers Squibb are among the pharmaceutical companies with the most at stake over payment changes in Part B, which represented about 8% of overall US drug spending in 2016.

Pharmaceutical manufacturers charge 1.8 times more in the United States than in other countries for drugs that fall under Medicare Part B, which are also used to treat conditions such as multiple sclerosis and autoimmune disorders, according to a Health and Human Services Department report released earlier Thursday.

President Donald Trump announces a plan to overhaul how Medicare pays for certain drugs during a speech at the Department of Health and Human Services October 25, 2018 in Washington, DC.

"Same company. Same box". But the proposal only applies to drugs administered in doctors' offices and outpatient hospital settings- "medicines like cancer treatments and injectable treatments for rheumatoid arthritis or eye conditions", Politico explains.

Administration actions have yet to show major impact on the cost of prescription drugs.

- Don't expect immediate rollbacks. The payment formula would be based partly on the drug's ASP in the USA and partly on the average price charged in other economically similar countries, which in most cases are lower than in the U.S. He made his announcement just ahead of the November 6 elections, with health care high among voters' concerns.

The Trump administration's new plan to pay for certain drugs in Medicare based on worldwide prices quickly set off a war with the drug industry after it was unveiled Thursday - and both sides are charging ahead with aggressive statements that the other is ignoring patients. Instead, private vendors would negotiate with drug companies on their behalf and then bill the federal government. The United States is the biggest funder of research and development in the pharmaceutical sector, yet lacks the bargaining power to bring prices down - unlike in countries with public health-care programs. "These proposals are to the detriment of American patients", PhRMA President and CEO Stephen J. Ubl said.

HHS based its IPI model on an analysis comparing Medicare spending for Part B physician-administered drugs to the prices of those drugs in 16 other developed economies-Austria, Belgium, Canada, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Japan, Portugal, Slovakia, Spain, Sweden, and the U.K. According to HHS, the us spent 1.8 times more for the drugs than the 16 countries studied.

Drug pricing expert Peter Bach of Memorial Sloan Kettering's Center for Health Policy and Outcomes called the plan "a pretty substantive proposal" but one that faces "serious political challenges".

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"Americans pay more so other countries can pay less". But that's "quite literally the opposite of what is being proposed". They may use group purchasing organizations to negotiate and secure lower prices.

Democratic leaders on Capitol Hill were dismissive. Drug spending within Medicare Part B reached $22 billion in 2015, and drug costs have increased by an average of 8.6 percent annually since 2007.

"The world reaps the benefits of American genius and innovation, while American citizens, and especially our great seniors who are hit the hardest pick up the tab", Trump said.

The health insurance industry, at odds with drugmakers over prices, was pleased with the administration's action. Officials said they're seeking input on how to select the areas of the country that will take part in the new pricing system.

HHS Secretary Azar tweeted that "Medicare was found to be paying the highest price for 19 out of the 27 drugs studied compared to these other countries". That includes Juul, which controls more than 70 percent of the market.

The proposed changes are related to the Medicare Part B program that pays for medications that patients receive in hospitals or in doctor's offices.

Sales of Amgen drugs through Part B, for example, totaled about $3.7 billion in 2016 - or about a fifth of the biotech's USA revenue of $17.5 billion in 2016, according to figures from Leerink.

HHS says overall savings to Medicare would total $17.2 billion over five years.

The move would cut costs for Medicare and save beneficiaries millions of dollars, according to the Times.

The plan could meet resistance not only from drugmakers but from doctors, now paid a percentage of the cost of the medications they administer.

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